Settlement discussions between Molson Coors and SAB Miller over the former’s right to distribute SAB’s brands in Canada have foundered and the beer giants are heading back to court.

A spokesperson for Molson Coors said yesterday that settlement discussions have broken down, and that the company is asking the court to schedule a trial date.

An SAB Miller spokesman told BeverageDaily.com today: "The parties have been engaged in settlement discussions but have been unable to reach a settlement at this time. Therefore, we are asking the court to schedule a trial date for the matter to be heard."

In January 2013 SAB told Molson it wished to end a long-standing distribution deal (active for the past 20+ years) that gave Molson Coors the rights to market and distribute brands including Millers Genuine Draft and Miller Lite in Canada.

Miller insists volumes sales unsatisfactory

The US-Canada brewer was doing so via its JV with SAB’s Canadian division (Miller Brewing Company) MillerCoors – but SAB claimed that Molson was failing to meet volume sales targets under the terms of the licensing agreement and that it could better grow its own brands in Canada.

SAB believes it has the right to end the contract since it gave Molson Coors Canada what it claims is the necessary six-month notice of termination, to run from January 18 2013.

But Molson strenuously denies Miller Brewing Company’s right to terminate the agreement, and last year filed a successful lawsuit in Ontario seeking to prevent termination of the licensing agreement.

“In our lawsuit, we also assert that Miller breached the license agreement by attempting to terminate the license agreement,” Molson Coors said last February.

Miller Coors fights to revive Miller Lite

The filing – Molson Canada 2005 v. Miller Brewing Company, Sup. Ct. of Justice-Ontario, CV-12-470589 – led to temporary injunction being issued by an Ontario court last June, blocking termination on July 22.

Miller Coors poor recent performance in premium lights in Canada is the crux of the issue – perversely perhaps one reason is the success of its craft brewing arm Tenth and Blake.

Volume sales of its premium light portfolio fell mid-single digits for the full year and Q4 ending December 31 2013.

Miller Lite sales fell high-single digit throughout 2013, and CEO Tom Long said Miller Coors had reintroduced the original Miller Lite can in December 2013 to “drive new interest and trial”.

“Based on strong consumer results, the original can pack will be extended nationally through September 30,” Long said in a February 13 earnings announcement.

“The brand will sponsor the South by Southwest Conference in March and this summer will partner with celebrity chef Guy Fieri on an off-premise promotion program,” he added.